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Investors

What are the U.S. federal income tax consequences of the Stock Dividend to Two Harbors common stockholders?

Q:

What are the U.S. federal income tax consequences of the Stock Dividend to Two Harbors common stockholders?

A:

Two Harbors intends to treat the Stock Dividend as a taxable distribution to its stockholders for U.S. federal income tax purposes, including for purposes of the U.S. federal tax withholding rules. Accordingly, the receipt of shares of Granite Point common stock by holders of Two Harbors common stock in the Stock Dividend is expected to be taxable for U.S. federal income tax purposes.

Each stockholder will be treated as receiving a distribution in an amount equal to the fair market value on the date of the Distribution of (i) the Granite Point Stock received plus (ii) the fractional share of Granite Point Stock sold by the distribution agent on such stockholder’s behalf. A stockholder will have a basis in the fractional share of Granite Point Stock that is to be sold by the distribution agent on such stockholder’s behalf equal to the fair market value of such fractional share. Upon the sale of such fractional share by the distribution agent on behalf of a stockholder, such stockholder generally will recognize short-term capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount realized and the stockholders basis in the fractional share. The number of shares from the Stock Dividend to be received by certain Two Harbors common stockholders, including non-U.S. stockholders, will be reduced in connection with any applicable withholding taxes.

HOLDERS OF TWO HARBORS COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE STOCK DIVIDEND.